The UK tool hire market is a mature market estimated to have grown by 4% in 2015, with a further 3% growth expected in 2016. Tool hire is a competitive market and comprises the 3 major hire sectors – large multi-branch tool hire specialists, builders merchants, and smaller independent tool hire operators. Demand for each type of equipment varies significantly, reflecting the performance of the end-use sector requiring the equipment as well as other factors such as the propensity to hire or buy within a given sector. Tool hire is a competitive market, something which impacts on hire rates. The upturn in construction levels in 2013 and 2014 saw some hirers start to increase hire rates, though the climate has been more difficult in 2015/16. Also, some trade sources have indicated that some larger corporates have increased their tender activity recently which puts increasing pressure on pricing. In addition, to address the issue of off-hiring as soon as possible, some hirers are offering lower prices to encourage end-users to keep equipment from one job to another.
In addition, other factors such as regional investment programmes, geographic, climatic and other seasonal factors all impact on demand. The UK climate has benefited the market in recent years with more extreme weather stimulating demand for products such as pumps, generators & dehumidifiers (in flooded areas) and post hole borers (high winds bringing down fences). Non construction activities stimulating demand for tool hire include manufacturing, events, gardening activities, facilities management and legislation. Key product sectors for the tool hire market are hand & power tools accounting for around a 20% share of the tool hire market, access equipment (14%), environmental control (8%), power welding & lighting (8%), plumbing & pumping (8%) and gardening & landscaping (8%).
The tool hire market is dominated by large, multi-branch organisations. Leading players in the market are HSS Hire, Speedy Hire and A-Plant, with some of the leading builders merchants gaining share in recent years. A range of outlets offer tool hire including builders merchants, DIY multiples and plant hire companies. By value, multiple branch outlets are estimated to have around 75-80% share of the UK tool hire market, while they hold a lower share by number of outlets, where builders merchants have a larger share. Companies have different policies on opening and closing branches, leading to some volatility in branch networks at an individual company level.
The future prospects of the tool hire market are difficult to project at this time given the state of the UK economy following the EU referendum results, and its vulnerability to events occurring in the Eurozone and global economy. Within AMA’s definition, the UK tool hire specialists market is expected to experience low level growth to 2020. From 2017 onwards, all construction sub-sectors except retail are forecast to increase output which will provide opportunities in all product sectors of the tool hire market – particularly sectors such as housebuilding, offices, industrial and infrastructure. The hire versus buy issue will obviously continue to impact on the tool hire market. As the construction industry grows, these issues will continue to be assessed and it is possible that more contractors may switch back to buying their tools, rather than hiring them, in the future.